Universal Registration Document - Fiscal 2024

The recoverable amount is the higher of its fair value (less the selling costs corresponding to the amount for which the Group could sell the asset) and its value in use, is typically determined based on the calculation of discounted future cash flows and requires significant judgment from Management, in particular as regards the preparation of business plans (generally for five years), as well as the discount and long-term growth rates used.

We deemed the measurement of the recoverable amount of goodwill to be a key audit matter, given the importance of these assets in the consolidated statement of financial position and the inherent uncertainty of certain assumptions, in particular the likelihood of achieving forecast results included in such measurement.

Our response

We performed a critical review of the methods applied by Management to determine the recoverable amount of goodwill. Our audit work consisted in:

• familiarizing ourselves with the methodology used to perform the impairment tests and assessing its compliance with IAS 36;
• verifying, using sampling techniques, the arithmetic accuracy of the model used to calculate the values in use;
• reconciling the elements comprising the net carrying amount of the assets used for the impairment test with the financial statements;
• assessing the Group’s Management’s assumptions underlying the projected cash flows via interviews with the Management of the geographical areas concerned;
• assessing, with the support of our evaluation experts, the reasonableness of the discount rates applied to projected future cash flows and the perpetual long-term growth rates used for projected flows;
• assessing the sensitivity analyses of the values in use to changes in the main assumptions used by the Group’s Management;
• evaluating the appropriateness of the information disclosed in Note 6.4 to the consolidated financial statements.

Tax risks

Note 10.2: “Litigation and contingent liabilities” to the consolidated financial statements

Key Audit Matter

The Group has operations in numerous countries around the world and, in the normal course of business, is subject to regular inspections by local tax authorities.

Such inspections may give rise to tax reassessments and disputes with tax authorities. As stated in Note 10: “Provisions, litigation and contingent liabilities” to the consolidated financial statements, a provision is recognized when the Group has a legal or constructive obligation at the closing date, if it is likely that there will be an outflow of resources and if the amount of the liability can be reliably estimated.

Estimates of the impacts of these tax risks and any related provisions involve significant judgment by Management, especially as regards the expected outcome of disputes in progress or the probability of identified risks occurring. Accordingly, we deemed this subject to be a key audit matter.

Our response

We gained an understanding of the internal control procedures implemented by the Group to identify tax risks and uncertain tax positions, and, when necessary, to determine the necessary provisions.

With the support of our tax experts, we also:

• held meetings with the Group’s tax department and the Management of the Companies concerned to assess the latest status of any inspections in progress and tax reassessments notified by the tax authorities, and to monitor developments in any disputes in progress;
• consulted the recent decisions and correspondence of the Group’s Companies with the tax authorities, on the one hand, and with their tax advisors, on the other hand;
• analyzed the responses of the tax advisors to our requests for information or their analyses of disputes in progress;
• examined the estimates and positions adopted by Management;
• assessed whether the latest developments had been factored into the risk analysis and the estimates of the provisions set aside in the statement of financial position.